Alexander Holmström, Global Sales Director, Vanderbilt Industries, explains the benefits to integrators and end-user customers in developing a recurring monthly revenue business model by offering Software-as-a-Service applications.
There’s been a shift in how security is delivered to customers. The traditional capital expenditure (CAPEX) model that has traditionally been present — that is, the investment around large installs and robust hardware — has taken a back seat with the economic fallout of COVID-19 shutdowns. But this has given rise to a fairly “new” phenomenon within the security industry globally: the rise of operational expenditures (OPEX) through software platforms and managed services.
The result is more recurring revenue sources for installers, dealers and integrators that offer managed services, such as cloud-based access control, intrusion and video, to their customers.
The concept of software-as-a-Service (SaaS) solutions, and the subsequent recurring monthly revenue (RMR) business models that are now in use by dealers and installers who sell this kind of solution, was once only referred to when monitoring and managing monthly contracts with end users. However, the proliferation of cloud-based technology has shifted the definition to incorporate more than just a legal binding; companies are no longer just selling systems, they’re providing a service.
SaaS applications, which allow organisations to hand off the managing aspect of the cloud to an integrator, are a natural fit for start-ups and small businesses. These customers are the ones that are unlikely to be attracted to the prospect of setting up and managing on-premises infrastructure and applications and would prefer a service-based approach from their integrator partners.
Managed solutions, such as access control-as-a-service (ACaaS), offer end users the ability to implement a robust security solution without having to invest heavily in IT infrastructure. Instead, the security oversight is shifted to the integrator through a hosted platform in the cloud, simplifying operations and overall management. The end user can still reap the benefits of cloud, such as accessing data and doors at any time from any location, and the integrator experiences advantages as well, such as:
The challenge for any integrator in providing managed access is in the shift from a more traditional “sell and install” model to that of RMR, which may take a bit of adjustment and the development of new procedures for sales and support teams if they are not already equipped to invoice on a recurring, scheduled basis.
Software manufacturers typically support integrators and installers with providing best practices for shifting to that revenue model and can provide training if required.
“Managed solutions, such as access control-as-a-service (ACaaS), offer end users the ability to implement a robust security solution without having to invest heavily in IT infrastructure.”
When evaluating manufacturers to work with for this kind of offering, it’s important to take into account one that knows the business and can provide ample guidance in transforming to this model to be truly successful. On the system side, it should be easy and quick to install with fast and efficient management, offering the modern features that are important to a wide range of today’s customers. A true partnership needs to be in place that allows for both parties to benefit and interact with each other to achieve the results for which each party is searching.
As with any new process, there may be a learning curve associated with developing an RMR-based business model, which is why it’s helpful to work with an established access control or intrusion software provider to address some of the questions that may arise as your business shifts to this model.
Due to automatic updates, installers will always be working on the most up-to-date version of the product. Additionally, all of the installer’s customers will have the same software version.
SaaS solutions help to maintain high service levels and proactively monitor service issues for the end-user. This predicts the possibility of a likely service event. Online services help users solve system problems online by providing real-time support without going to the site. Through service call planning, an installer can see service issues and prepare a technician with the right parts in advance of the visit.
Also, installers can organise service calls into efficient locales so the technician will not be traveling great distances.
Less IT infrastructure requirements reduce the reliance on overworked IT departments. With SaaS systems, the on-site hardware service is eliminated. This eliminates the user having server issues, and spending massive amounts of time searching for a resolution.
Moreover, for the end-user, SaaS systems typically deliver a lower cost of ownership over time due to lower service costs, lower hardware maintenance costs, and the ease of use of the product.
The future of RMR as a result of the influx of SaaS solutions will depend on a number of factors, with the most important being the type of systems and solutions involved. And, as long as cloud-based technologies are at the forefront of the security industry, it is likely that integrators will continue to desire the ability to add more value to their offerings through a recurring monthly service agreement.
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